When constructing a solid financial plan, you may find that there are pieces which may be overlooked that are necessary to complete the picture. West Capital Management strives to ensure our clients are educated on the factors that can derail them or can hinder efficiencies. Below are some thoughtful questions which may help you identify some often overlooked aspects of building a cohesive strategy. If you find that any of these questions intrigues you, please contact us to have a meaningful discussion regarding your plan.

Q: Do you have newly opened investment accounts since creating your estate plan?

The titling of accounts can play an important role in how your assets ultimately distribute to your heirs. For example, retirement accounts have beneficiary designations that determine who receives these accounts. If overlooked, these designations can inadvertently circumvent your intentions that are laid out in your estate documents.

Q: Do you have or are you considering the use of life insurance to provide estate liquidity?

Using life insurance is a common strategy to ensure liquidity to cover your estate transfer costs. However, owning life insurance in an Irrevocable Life Insurance Trust (ILIT) instead of in your own name can put more of these dollars to work for you by removing the insurance proceeds from your taxable estate.

Q: Do you know if there is the use of leverage inside of your investment strategies?

Certain investment strategies can utilize leverage to enhance potential returns. Leverage is not always transparent when reading an investment statement and is often found deep inside a strategy’s prospectus. While leverage can enhance returns, it may also potentially enhance losses and should be considered if this (often unseen) risk is necessary to accomplish your objectives.

Q: Do you currently use target-date funds as part of your retirement strategy?

Target date funds can be tricky as these investments assume that all investors who are retiring in similar years have similar risk tolerances and cash flow needs in retirement. Typically, these funds reduce risk as the target retirement date approaches. Certain investors may need or may wish to have a higher risk tolerance or need to take risk in order to achieve their investment goals.

Q: Do you understand your cumulative exposure across all of your investment accounts, both taxable and tax-deferred accounts?

West Capital Management provides its clients with account aggregation services, which allows investors to get a firm understanding of all of their allocations and collective risks they are exposed to.

Q: Gifting – Do you intend to provide financial support for someone’s education?

Paying an institution directly vs. giving money to the recipient outright can help you avoid unintended gifting for tax purposes.

Q: Do you feel you have too much cash sitting on the sidelines but are unsure of where or how to invest it?

Many investors have been cautious since the financial crisis on putting their capital back to work as they fear they will be ill-timed if there is another correction. Historical analysis shows that more money is lost waiting for the correction than in the correction itself. Having a sound investment implementation plan will alleviate the detrimental effects of inflation and emotional distress that can prevent your money from working for you.